Australia Stocks Fall on Concern World Economy Will Deteriorate

By Shani Raja

Oct. 16 (Bloomberg) -- Australian stocks tumbled, led by banks, resources and energy companies, on concern the global economy will deteriorate, even as governments beef up efforts to stabilize the international banking system.

Macquarie Group Ltd., Australia's biggest securities company, slumped 8.5 percent. BHP Billiton Ltd., the world's largest mining company, plunged the most in 21 years. Woodside Petroleum Ltd. dropped to its lowest price since March 2007.

``The market's now pricing in a significant global slowdown,'' said Saxon Nicholls, Melbourne-based principal at Herschel Asset Management Ltd., which manages about $500 million. ``That implies slowing demand for commodities, and the concept of a more general slowdown affecting pretty much everything.''


Australia's benchmark S&P/ASX 200 Index fell 5.5 percent to 4,036.90 at 10:20 a.m., stalling its rebound from the worst weekly rout in its history dating back to 1992 as governments worldwide took steps to shore up banks. U.S. stocks dropped the most since 1987 yesterday after the biggest decline in retail sales in three years, and amid growing doubts that bank bailouts will prevent the economic slump from worsening.

The Standard & Poor's 500 Index sank 9 percent to 907.84, with nine companies declining more than 20 percent. The Dow Jones Industrial Average retreated 733.08, or 7.9 percent, to 8,577.91, its second-biggest point drop ever.

A measure of six metals traded in London slumped 6.5 percent yesterday, with copper dropping 7.2 percent, zinc 6.7 percent and nickel 7 percent. In New York, crude oil fell 5.2 percent, and dropped below $75 a barrel for the first time in more than a year.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.